SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No: 37065 / April 4, 1996
Administrative File No: 3-8981
ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS INSTITUTED
AGAINST FLAGSHIP SECURITIES, INC., DENNIS G. MILEWITZ AND NOREEN
M. BARRINGTON
The Commission instituted public administrative proceedings,
pursuant to Sections 15(b) and 19(h) of the Securities Exchange
Act of 1934 ("Exchange Act"), and cease and desist proceedings,
pursuant to Section 21C of the Exchange Act, against Flagship
Securities, Inc. ("FSI"), which is a registered broker-dealer
located in Syracuse, New York, Dennis G. Milewitz ("Milewitz")
and Noreen M. Barrington ("Barrington"). Milewitz owns 50% of
FSI, and Barrington is FSI's office manager. The Commission's
order alleges that, from April 6, 1994 through July 31, 1994,
FSI: (1) knowingly maintained fully paid for customers'
securities as collateral for FSI's loan account; (2) commingled
fully paid for customers' securities with FSI's securities; (3)
failed to properly compute FSI's reserve formula, thereby causing
a deficiency in FSI's special reserve bank account for the
exclusive benefit of FSI's customers; and (4) failed to utilize a
settlement date basis for its securities position record.
In addition, the Commission's order alleges that Milewitz and
Barrington willfully aided and abetted and/or caused those
violations. Further, Milewitz failed reasonably to supervise
Barrington with a view to preventing certain of Barrington's
aiding and abetting violations. A hearing will be scheduled to
determine whether the allegations against FSI, Milewitz and
Barrington are true and, if so, what sanctions, if any, are
appropriate and in the public interest, whether a cease and
desist order against FSI, Milewitz and Barrington is appropriate,
whether disgorgement and reasonable interest against FSI is
appropriate, and whether civil penalties should be imposed upon
FSI, Milewitz and Barrington.